India’s GDP data for the June 2022 quarter is slated to be released on Wednesday (August 31). The quarter witnessed economic recovery despite global uncertainty and high inflation amid the Russia-Ukraine war. For Q1FY23, all analysts are forecasting India’s economic growth in the double digits and higher than the previous quarter. Here’s what you need to watch out for in the latest GDP numbers:
Consumption
Private final consumption expenditure is the largest component accounting for 60 per cent of the GDP. Its movement has a huge weightage on the entire GDP number. It grew 1.8 per cent year-on-year in the March 2022 quarter. Government final consumption expenditure in January-March 2022 saw a marginal rise.
Investment and Infrastructure
Gross fixed capital formation (GFCF) is an indicator of investment activity in the country. A growth in GFCF indicates a jump in investment in the country. Now, that the country witnessed an outflow of foreign portfolio investment during April-June 2022, this data would be closely watched out for in the latest numbers. GFCF witnessed a growth of 5.1 per cent in the March 2022 quarter.
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Agriculture Growth
Agriculture is the sector that remained resilient during the pandemic period. It provided positive growth when all other sectors posted negative growth during the lockdown. Now, however, rating agency Icra said the gross value added (GVA) growth in agriculture, forestry and fishing is likely to fall to 1 per cent in Q1FY23, compared with 4.1 per cent in the previous quarter. It said the likely decline is due to heat waves in several parts of the country that adversely affected wheat production in the country. Gross value added is GDP minus net product taxes.
Manufacturing Growth/ Industrial Sector
Manufacturing growth has been hit majorly first during the coronavirus pandemic and then due to the Russia-Ukraine war that led to supply disruptions, which increased commodity prices and thus input costs for companies. The manufacturing sector witnessed a contraction of 0.2 per cent in the March 2022 quarter.
Services Sector Growth
Icra in its report has said that during the June 2022 quarter, the GDP growth is likely to be driven by the services sector, followed by the industry.
During the pandemic, the trade, hotels, transport, communication & services related to broadcasting were adversely affected the most. The hospitality sector almost stopped with no footfall due to the lockdown and COVID-19 restrictions. The sector showed improvement in 2021-22 and posted a growth of 11.1 per cent, against a decline of 20.2 per cent last year.
Now, after the mass vaccination, the sector has started gathering pace.
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With regards to the overall GDP growth, analysts have a range of growth forecasts from 13 per cent to 16.2 per cent. Rating agency Icra expects India’s GDP to grow 13 per cent in Q1FY23, State Bank of India (SBI) sees a 15.7 per cent growth, and the RBI forecasts it at 16.2 per cent.
In the previous quarter (Q4FY22), the country’s GDP rose 4.1 per cent. For the full financial year 2021-22, the GDP saw a growth of 8.7 per cent.
